Tuesday, September 3, 2013

Thousands of South African Gold Mine Workers Stop Work

Johannesburg, South Africa - Mine Workers on Strike

An estimated 90,000 South African gold miners have joined tens of thousands of labourers in other sectors on a strike seeking better wages, though their union has significantly scaled down the demands.

From earlier demands for increases of wages up to 60 percent for some workers, the National Union of Mineworkers (NUM) is now calling for a 10% wage rise. The NUM is the largest union representing about 64% of South Africa's 120,000 gold miners

Last week the workers rejected an offer of a 6.5 percent rise - the same as the current annual rate of inflation.

The workers went ahead with their strike plans Tuesday despite President Jacob Zuma urged urging both sides to find a solution, saying: "A strike hurts both sides."

South Africa's gold industry though one of the biggest in the world, has been in decline in recent years, while the platinum sector is still recovering from violence during last year's strikes.

It has been estimated that the gold miners' strike could cost South Africa more than $30m (pounds20million) a day in lost output.

NUM is demanding an increase of at least 2,300 rands a month for entry level workers nearly 10 times what producers are willing to pay. Mine owners are warning that a steep increase in wages would make the gold mines unviable, leading to gold mines closing and thousands of jobs being lost, following a fall in the price of gold.

They say that their production costs have increased as they have had to dig ever deeper to extract gold.

Labour unrest since last year has left more than 50 people dead and put renewed pressure on Zuma ahead of elections next year. The rand last week slid to a four-year low.

With stoppages in auto and building sectors already hitting an economy suffering from slow growth and unemployment at 25 percent, strikes could cripple an industry that has produced a third of the world's bullion but is now in rapid decline.

For many years, South Africa was by far the world's largest gold producer and accounted for 68% of global output in 1970, reports the AFP news agency.

It has now come down in ranking to the 5th biggest, with just 6 percent of world production .

Unlike NUM, the more hardline group, the Association of Mineworkers and Construction Union (AMCU), is pushing for 150 percent hike.

The strike " has officially started. There are people who have not gone underground," Charmane Russell, a spokeswoman for gold producers grouped in the Chamber of Mines, told Reuters.

It was aware of the "devastating" impact industrial action would have on the economy, the NUM said.

South Africans were shocked last year when police shot dead 34 platinum miners during an unofficial strike called by a rival union, which accused the NUM of being too close to the ANC government.

With stoppages in the auto industry and the construction sector already sapping the struggling economy, shutting gold mines could cripple an industry that has produced a third of the world's bullion but is now in rapid decline.

"If indeed we are going to have a protracted industrial action, it will impact negatively on the economy," minister Susan Shabangu said at a presidential briefing in Pretoria.

"If there is a need for government to intervene, we will engage the parties," she said.

Economists say South Africa's economy, already suffering from slow growth and high unemployment, call ill afford the lost output - from an industry shutdown in gold.